Should You Take Out Life Insurance, and Why?
Life insurance is very often described as the preferred investment with its advantageous tax framework and the financial possibilities it offers.
It is indeed a long-term savings product that offers better returns than some more traditional products and can also serve many purposes.But what is a life insurance policy, why buy one and how does it work? Let’s find out in this article
HOW DOES LIFE INSURANCE WORK?
As indicated in its name, this is a contract in the event of life: the insurer must pay back the capital at the end of the contract, together with interest, to the subscriber, or to the beneficiaries at the time of the end of contract or after death of the insured.
When opening the life insurance contract, an amount is placed in a multi-support contract either in a fund (capital guaranteed by the company) or in the form of units of account listed on the stock exchange (and therefore subject to variations thereof).
Everyone can hold as many life insurance contracts as they wish for a given period.The funds remain available but the capital gains from withdrawals are taxed on this occasion. Premiums or payments can be paid all at once, several times (one-off) or regularly (monthly for example).
At the end of the contract, the insured can withdraw all of his capital, take it in instalments or in the form of a life annuity (an annuity will be paid to the insured until his death).
Regarding the beneficiary of the life insurance contract, it may be a person clearly named on the contract or direct heirs (family members). The life insurance contract therefore makes it possible to modify the distribution of property when a specific beneficiary is named. Contact insurance service providers in India to know more about it.
The various events in the life of the product are subject to charges levied by the insurer. These costs can relate to the opening of the contract, the costs during the payments, the acts of management, the arbitrations between the various funds.
WHAT CAN LIFE INSURANCE DO FOR YOU IN RETIREMENT?
Life insurance is a contract that allows, above all, to make an interesting financial investment. The starting amount can be minimal or significantly more. As seen above, the life insurance contract is financially advantageous and very comprehensive, but it can sometimes be very complex.
But why choose a life insurance contract to build up capital or pass it on? For tax reasons, of course. But also to find flexibility in the organization of his succession since the sums placed on a contract can be transmitted to the person of his choice.
The main advantage of investing in the form of a life insurance contract lies in the fact that only realized capital gains are subject to income tax and social security contributions.
This contract allows you to pursue two objectives:
- Building up long-term savings through the payment of premiums
- The transmission of a capital: the death of the subscriber triggers the transmission of the capital to the beneficiaries.
We suggest you to consult life insurance services to know the pros and cons of investing in life insurance, it can yield various benefits for the insured and is ideal for people who want to make their retirement easier.